Kerry Stokes and Rupert Murdoch say ad market has improved – but will it last?

Media moguls Kerry Stokes and Rupert Murdoch agree that the advertising market is growing strongly as global economies recover, but Stokes is not yet convinced that early signs of recovery will continue into next year.

Stokes gave the warnings following his first meeting as chairman of West Australian Newspapers, saying he expects newspaper circulation to return to its 2008 levels by next year but the overall economy will remain volatile.

“I can’t say I’m not worried about it because having been through the sheer cliff that we went over, to see such a recovery so quick is of concern. It can’t be that easy,” he told the Australian Financial Review.
“I’m really heartened that we’ve got a recovery under way (but) concerned that it maintains its steam into next year.”

In the US, Murdoch reported an 11% rise in NewsCorp’s first quarter net profit, along with a lift in its full-year guidance, saying the company is taking advantage of improving economic conditions.

Net profit rose to $US571 million, while the company upgraded its EBIT guidance for the 2010 financial year to high single-digit to low double-digit percentage growth. Earnings before interest and tax rose 9% to $US1.04 billion, with Murdoch saying the results and new expectations are “exceptionally strong”.

“I am pleased that News Corporation has delivered exceptionally strong results this quarter, despite continued macro-economic challenges,” he said.

“The strategic steps we took last year to ensure stability during the downturn have proven successful, with significant cost reductions offsetting much of the revenue declines in our television and newspapers and information services segments.”

Murdoch also said the company is operating in economies that are “clearly in better shape than they were a year ago… We have further positioned our operations to take advantage of the improvements we are seeing globally”.

However, Murdoch refused to comment about his push to charge online readers for content saying: “I’m not prepared to comment on that at all. It’s a work in progress”.

But Stokes did come out in support of Murdoch’s paid content move, saying he expects WAN to eventually move towards a paid model.

“Obviously we agree that as newspapers we gather the information and other people take it. We’re not sure how the model is going to work to be paid, particularly when organisations such the ABC are always going to have the news up on their websites. It’s something I guess we’ll all be looking at to see how we can get there, presumably through Rupert, to an online paid version.”

Stokes also responded to the declining popularity of newspapers in the US, saying the format won’t die as long as consumer demand calls for hard-copy papers.

“The people who buy newspapers will always buy newspapers because they want hard copies,” he said. “And the new generation who are used to reading it on devices will appreciate electronic versions. I think the talk of the death of newspapers is a bit premature.”

“On the other hand, I watch with horror in America as the carnage of newspapers continues. If you go to America and actually pick up one of the newspapers… they’re horrible.”